A category III long-only AIF scheme managed by Gurugram-based Siddharth Oberoi delivered robust alpha for its high networth investors in 2023. This is Prudent Equity Ace Fund, which advanced 72.41 per cent in the past 12 months when the broader indices BSE SmallCap and BSE MidCap soared 48 per cent and 46 per cent, respectively. The minimum investment size in the alternative investment fund is Rs 1 crore.
Investment Strategy
Sharing the investment strategy, the fund manager told Business Today that they practice bottom-up stock picking, that is, being focused on individual companies rather than taking a broad macro call. “The investment philosophy of the fund is the same as it has been for the past 13 years. When we buy a security, we keep three things in mind: growth and its durability, clean corporate governance, and rational capital allocation. If a company lacks any of these qualities, we choose not to invest in it,” Oberoi said. The fund delivered 47.24 per cent return in the past 6 months and 16.89 per cent in the last three months.
Stocks and sectors
The portfolio manager added that their large positions are in the infrastructure sector. They have also made some large bets in banks and real estate companies. “We believe these sectors offer humungous growth at the same time there is valuation comfort in them. Our top allocations were Time Technoplast, Welspun Enterprises, Ramky Infrastructure, J Kumar Infraprojects and Shriram Properties,” the market watcher said.
The road ahead
Oberoi believes that 2024 will witness massive volatility. He said that Indian markets have been on a continuous run with no major downcycle. While the valuations remain stretched, earnings growth is surpassing past records, which lends some credence to the present market valuations. Overall, Oberoi is positive on 2024.
Sharing the list of his favourite sectors, he said, “We remain bullish on infrastructure, banking, renewable energy sector and engineering. Also, we have invested in a lot of turnaround companies, particularly debt restructuring stories. We are also participating in several special situation opportunities. We believe the Indian markets are providing ample opportunities to grow capital.”
Risks ahead
At the time when the markets are hovering at record high levels, Oberoi believes valuation-wise these are challenging times for investors. “Risk is a perennial in the stock market, and since we cannot forecast the macro environment, we will continue to concentrate on the particular risks to the company. Hence, overvaluation remains the biggest risk. Other factors are interest rates. Presently, the consensus is an eventual fall in interest rates. Any change in that would lead to growth projections going haywire,” Oberoi said.